Tata Motors slips on slower growth at JLR

Moneycontrol Bureau

Tata Motors slipped over 1 percent on Wednesday morning after its Jaguar Land Rover unit reported subdued growth in February sales.

The UK-headquartered maker of luxury saloons and sports utility vehicles said sales last month rose just 3 percent year-on-year to 26,855 units, as holidays hurt sales in China, one of its biggest markets.

There was a week long holiday in China last month to celebrate the new year and that meant less selling days for dealers. As such luxury car industry volumes were down 14 percent YoY in China, point out Hitesh Goel and Vinay Kumar of Kotak Institutional Equities.

The company's sales in China declined 22 percent in Feb. On the other hand, sales in Asia Pacific region and North America were up 20 percent respectively, UK sales rose 15 percent and sales in Europe gained 6 percent.

Jaguar sales rose 27 percent last month to 4,595 units, with strong demand for the XF (up 27 percent) and XJ (up 15 percent). Land Rover sales, meanwhile, were down slightly at 22,260 units due to drop in Chinese demand.

The analysts say, growth outlook at JLR remains strong, given the "impressive ramp-up in new model launches." The new Range Rover Sport which will be unveiled later this month, continued strong demand for its Evoque compact SUV and other new launches like the small Jaguar and the China plant launch in FY2015 (it will help reduce price by at least 25 percent), should help its market share "inch up," they say.

While JLR's drive ahead seems a cruise, Tata Motors continues to hit speed bumps in the domestic market. Its market share in the passenger car segment hit a new low of 4.9 percent in Feb, according to a report by Economic Times. The maker of Indica, Vista, Indigo and Nano range of cars only managed to sell 10,613 passenger vehicles last month in domestic market, compared with 34,832 units it sold a year ago.

While the overall passenger car industry as such as hit a slowdown in India due to high fuel prices and expensive loans, analysts have pointed out that lack of any new big car launch from the Tatas in the last 2-3 years has hurt the company.

Kotak Institutional Equities has a "buy" rating on the stock with a Rs 340 target price.

At 9:45 hrs, Tata Motors was down 1.5 percent at 300.25 on NSE.